OPEC Member Countries Map 11,854,977 km² 33,327,700 bbl/day The OPEC member countries map shows a World Map, where all the member countries of OPEC have been highlighted. OPEC stands for the Organization of the Petroleum Exporting Countries. The mission of OPEC is to coordinate and unify petroleum policies of Member Countries. OPEC is made up of eleven developing countries - Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. These countries rely on oil revenues as their main source of income. All these countries export oil substantially. The organization aims at coordinating and unifying petroleum policies of its member countries. OPEC also aims at stabilizing prices in the international oil markets. It wants to secure a steady income to the producing countries. OPEC has not succeeded always in putting a stabilizing influence on the market. Oil revenues are vital for the economic development of these nations. The Representatives of OPEC Member Countries (Heads of Delegation) get together at the OPEC Conference to co-ordinate and unify petroleum policies. Their aim is to promote stability and harmony in the oil market.

About 40 per cent of the world's oil output comes from the OPEC member countries. They possess more than three-quarters of the world's total proven crude oil reserves. Educate Yourself - OPEC / 1973 - Part Two OPEC / 1973 - Part Two Brian Trumbore President/Editor, StocksandNews.com Well, as I like to say, I certainly don't expect these columns to win any Pulitzer's. To wit, I really should have explained what countries are members of OPEC before I did last week's article. So please accept my apology as we go back, back, back to fill in some gaps. OPEC was formed at a conference held in Baghdad, September 10-14, 1960. There were five original members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between 1960 and 1975, the organization expanded to 13 members with the addition of Qatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Gabon. Ecuador dropped out in December 1992 and in January 1995 Gabon was removed from the roster.

Despite all of its press, and influence, it may surprise you to learn that OPEC produces just 40 percent of the world's oil. It does, however, hold more than 77 percent of the world's proven reserves. OPEC also contains nearly all of the world's excess oil production capacity. Non-OPEC nations thus produce nearly 60 percent of the world's crude oil. But non-OPEC countries have smaller reserves which are being depleted more rapidly than in OPEC. For this reason, it behooves these nations to continue to aggressively pursue new energy sources. Current non-OPEC production is concentrated in seven countries: Canada, the United Kingdom, Norway, Mexico, China, Russia and the U.S. Five of these seven are net exporters to the world oil market, the U.S. and China being the exceptions. Together, the seven account for about 60 percent of non-OPEC production, with the U.S. and Russia being the largest. The remaining sources of non-OPEC oil are from 14 nations, including Syria, Brazil, Colombia and Oman. Continuing then where we left off last week. In March 1974 the Arab oil embargo was lifted but the event had left its mark.

American prosperity had depended in part on what the Shah of Iran described as "the mystical power of the oil companies," or, the arrogance with which the industrial world, in the role of colonial power, claimed dominion over the planet's natural resources. The price of oil continued to rise throughout the '70s. And oil wasn't the only commodity to do so. By 1980, other commodities such as tin, silver and gold rose to all-time highs while rubber, cotton and grain also rose to high levels. In 1974 the Consumer Price Index rose to 11 percent. This was the highest peacetime price-surge in American history. By 1975, President Gerald Ford had unveiled his "Whip Inflation Now" program. Meanwhile, between 1973 and '78, annual revenues from oil in the main Arab producing countries grew enormously. For example: Saudi Arabia's rose from $4.35 billion to $36 billion, Kuwait's went from $1.7B to $9.2B, and Iraq's increased from $1.8B to $23.6B.

But this increase in wealth led to an increase in dependence on the very industrialized countries they had sought to teach a lesson. The producing countries had to sell their oil, and the industrial countries were their main customers. In the course of the 1970s, the excess of demand over supply came to an end, because of economic recession, attempts to economize in fuel consumption, and increased production by countries which were not members of OPEC. The bargaining position of OPEC grew weaker and a high and uniform price level was going to be difficult to maintain. And the huge surpluses that were created in the producing nations had to be invested somewhere so, for the most part, they were invested in the industrial countries. They had to go to the same nations for technical expertise in order to develop their own economies and they sought outside help in building their armed forces. The U.S. was also increasingly prepared to threaten force if oil supplies were interrupted again. We were not just worried about revolutions in the producing countries but also the extension of Soviet influence in the region, i.e., the 1979 invasion of Afghanistan. After the 1973 oil embargo, Kissinger and Nixon had looked on Iran as an important regional ally.

Unlike King Faisal in Saudi Arabia, the Shah of Iran did not use his oil to place political pressure on the U.S., although he greatly increased its price. [The U.S. did still supply Saudi Arabia with large amounts of aid]. In addition, Iran allowed the U.S. to refuel ships at its ports and continued American antagonism of the Soviet Union. Nevertheless, the second oil crisis (which really started in 1978 when Iran led a new price increase), accelerated as a result of the Iranian revolution as well as political reaction to the Camp David Accords between Egypt and Israel. Oil was to hit $40 a barrel by 1981. But eventually the price peaked due, again, to the simple forces of supply and demand. The industrialized nations began to develop more efficient uses of energy while OPEC failed to maintain a united front on prices and volume of production. The price of crude has generally been in a free fall since '81. Even with the recent price rise, in inflation-adjusted terms, we have a long ways to go to begin to come close to the levels of the late 70s / early 80s.

And one interesting note: there was an item in the Wall Street Journal recently concerning Russia's Gazprom, the world's largest producer and exporter of natural gas. They are proposing a cartel along the lines of OPEC to raise the price of gas, a lot of which is used in Europe. Gazprom is looking to reach agreements with two other major gas producers, Norway and Algeria. If gas prices remain low, Gazprom warned, Russia may balk at extending supply contracts in Western Europe. Finally, what have we learned from the two price shocks of the '70s? Little. We still import way too much oil. Asia, for example, is back up to around 70% [from the Middle East] in some countries. Should the global economic recovery continue, there is no doubt that the $22 prices of today will look cheap in a year or so. Sources: "The Great Wave, " by David Hackett Fischer; "A History of the Arab Peoples," by Albert Hourani; "A Reassessment of U.S. Strategic Interests in the Post-Gulf War Middle East," by W. Judd Peak Brian Trumbore Go to The BUYandHOLD website contains links to third-party websites on the Internet.

BUYandHOLD provides these links to these websites only as a convenience to users of the website. Links on the BUYandHOLD website are not endorsements by BUYandHOLD or Freedom Investments, implied or express, of the linked sites or any products, services or links in such sites; and no information in such sites has been endorsed or approved by BUYandHOLD. Linked sites are not under the control of BUYandHOLD or Freedom Investments, and we are not responsible for the contents of any linked site or any link contained in a linked site. No information contained in the BUYandHOLD website or accessed through any linked site, or any link contained in a linked site, constitutes a recommendation by BUYandHOLD or Freedom Investments to buy, sell or hold any security, financial product or instrument. Information accessed through linked sites is not, nor should be construed as, an offer or a solicitation of an offer, to buy or sell securities by BUYandHOLD or Freedom Investments.

BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy, and any investment decisions you make will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. Copyright © 1999  2014 Freedom Investments. All Rights Reserved. OPEC : Member Countries Member Countries Home About Us Member Countries Member Countries The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the Founder Members of the Organization. These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) and Angola (2007).

Ecuador suspended its membership in December 1992, but rejoined OPEC in October 2007. Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171st Meeting of the OPEC Conference on 30 November 2016. Gabon terminated its membership in January 1995. However, it rejoined the Organization in July 2016. This means that, currently, the Organization has a total of 13 Member Countries. The OPEC Statute distinguishes between the Founder Members and Full Members - those countries whose applications for membership have been accepted by the Conference. The Statute stipulates that “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members.” The Statute further provides for Associate Members which are those countries that do not qualify for full membership, but are nevertheless admitted under such special conditions as may be prescribed by the Conference.

OPEC facts, information, pictures | Encyclopedia.com articles about OPEC Organization of Petroleum Exporting Countries (OPEC) Encyclopedia of the Modern Middle East and North Africa COPYRIGHT 2004 The Gale Group, Inc. ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) group formed in 1960 to protect economic interests of oil-exporting countries. In the early 1950s, international oil companies (IOCs) developed the posted price system to help host governments estimate oil revenues in advance. Posted prices were accounting devices that host governments used to calculate the amount of taxes the companies would pay under industrywide fifty-fifty profit-sharing agreements. Despite normal fluctuations in the real prices at which crude oil was traded, posted prices were not adjusted, and fixed posted prices became an industry norm. When competitive pressures forced the IOCs to reduce posted prices unilaterally in February 1959, an immediate outcry arose from the affected host governments. OPEC's Founding The first Arab Oil Congress met later that year. Delegates from oil-exporting countries came to plan concerted action against the oil companies. Structural differences among national oil industries made coordination among these countries difficult technically.

Conflicts of interest over investment and production shares made coordination difficult politically. Competition between Venezuela and Middle Eastern exporters was heightened by the 1959 posted price cuts. British Petroleum set lower prices in parts of the Middle East than in Venezuela in hope of breaking the As-Is Agreement, a mediated connection between world oil prices and the U.S. market. Venezuelan oil thereby became even less competitive, requiring further downward price adjustments and convincing oil exporters that their responses to the companies had to be closely coordinated. Political conflicts ended the Oil Consultation Commission, the first producer attempt to institutionalize coordination. But when the IOCs imposed yet another round of price cuts in August 1960, five oil-exporting countries set aside their political differences to salvage their economic interests. Venezuela, Saudi Arabia , Iran , Iraq , and Kuwait formed the Organization of Petroleum Exporting Countries (OPEC) in September 1960. OPEC's first resolutions included calls to restore posted prices to their pre-February 1959 levels and to stabilize oil prices by regulating production. The U.S. government refused to recognize OPEC, forbade U.S.

oil companies to negotiate with it, and imposed trade sanctions on OPEC members to discourage other countries from joining. This suited the IOCs, which saw an advantage in continuing their accustomed practice of dealing with host governments one at a time. OPEC responded creatively, developing joint negotiating positions with the understanding that any member able to gain an additional advantage on its own should do so. Any gains would constitute a new floor for bargaining in the next round. During its first ten years, this "leapfrogging" earned OPEC members incremental gains in oil revenues, which both increased OPEC's international stature and attracted new members to the organization. Perhaps OPEC's most significant contribution to the oil revolution was its support and implementation of "participation," the gradual nationalization of foreign-owned oil properties. Most members did not follow the participation strategy to the letter, but years of discussion provided an opportunity to prepare for the responsibilities that would come when they became full owners of their oil industries. This accomplishment was overshadowed, however, by OPEC's successful utilization of leapfrogging to achieve rapid oil price increases, by Libya in 1970 and afterward by alternating pressure exerted first by oil-exporting countries in the Mediterranean and then in the Persian Gulf .

This set the stage for OPEC's takeover of crude oil pricing when the 1973 Arab–Israel War, with its well-designed Arab oil embargo, provided the opportunity. Pricing Strategies OPEC's success in taking over oil pricing created new problems for the group. Oil-importing countries, led by the United States , demonized OPEC as the primary cause of worldwide economic decline. Inside OPEC, structural differences among member industries led to disagreements over pricing strategies. Low-price-preference members such as Saudi Arabia, with small populations and huge oil reserves, favored moderate oil prices to discourage consumers from seeking alternative fuels. High-price-preference members like Algeria , with large populations, wanted high prices so they could pay for ambitious development programs, while their small reserves offered no incentive to support pricing policies that would sustain the long-term attractiveness of oil as a fuel. Some members with large reserves, like Iran and Libya, also favored high prices. Iran had a large population and an ambitious development program, but Libya's preference was politically motivated by Libya's desire to assert its autonomy among its OPEC peers as well as its independence from western domination. Price positions could be flexible, however.

In 1978, the threat of revolution pushed Mohammad Reza Shah Pahlavi of Iran to seek allies among his neighbors. Iran joined most of the Arab gulf countries in pushing for the adoption of a long-range moderate pricing strategy to replace what had, until then, been an ad hoc method of setting oil prices. The new system became obsolete almost before it was agreed upon, however; it was superseded by pressures that doubled oil prices in one year thanks to panic buying during the Iranian Revolution. Predictably, oil demand fell, but the availability of new, non-OPEC supplies from the North Sea and elsewhere allowed major importers to shift their purchases, making OPEC the marginal supplier of crude oil to the world market. Market weakness in the early 1980s caused OPEC to focus on oil production sharing as a strategy for controlling oil prices by regulating crude supply. A voluntary production-sharing plan was launched in 1982 but, as had happened to the voluntary oil import quota in the United States during the 1950s, producers ignored it.

A mandatory quota system was introduced in March 1983, and crude prices were reduced for the first time since OPEC had assumed its price-setting role in the hope of stimulating consumer demand. An Austrian accounting firm was hired to monitor member production in order to discourage cheating on the quotas. The quota system had many flaws. Even small producers were required to accept a quota, prompting Ecuador to leave OPEC in 1993 to escape its quota obligations. Saudi Arabia, OPEC's largest producer, refused to accept a formal quota that it said was an unacceptable infringement on its sovereignty. This marginalized Saudi production within OPEC as crude from many sources flooded the market and total demand for OPEC oil declined. Without a quota and its implied entitlement to produce a defined share of OPEC crude, the Saudis had to accept the informal role of swing producer, one which would vary its production to satisfy market demand remaining after other producers had supplied their quota amounts. As OPEC's swing producer, however, Saudi Arabia would have to absorb more than a proportional share of demand reduction.

This already unpleasant situation would be complicated in the Saudi case by its heavy dependence on associated natural gas, which led to shortages of fuel for power generation when oil production there fell to below 3 million barrels per day in mid-1985. Shortly afterward, Saudi Arabia decided to produce oil with only its own needs in mind. Global supplies burgeoned and oil prices plummeted, dipping below $10 U.S. per barrel in June 1986. Although oil prices recovered, they have yet to return to pre-1985 highs. Political Divisions Political conflicts continued to divide OPEC members during this time. The first Gulf War, between Iran and Iraq (1980–1988), so split the organization that OPEC could not agree on a new secretary-general when it was Iran's turn to nominate one of its nationals. An assistant secretary-general, Fadhil al-Chalabi of Iraq, served as acting secretary-general from 1983 to 1988. Hostility among members during this period made meetings acrimonious and reduced the usefulness of OPEC as a forum for coordinating policy.

The end of the Iran–Iraq War provided an opportunity to mend intra-OPEC relations, but the second Gulf War, which began when Iraq invaded Kuwait in 1990, brought new turmoil to oil markets and to OPEC itself. Before Iraq invaded Kuwait, world oil prices were depressed and virtually every OPEC member with excess production capacity was producing over its quota. Unfortunately for Kuwait, it was the only country small enough and close enough to suffer Iraq's wrath directly. After Kuwait was liberated in February 1991, U.N. sanctions against Iraq, imposed in retaliation for the invasion, ended legal oil exports from Iraq. Starting in December 1996, Iraqi income from smuggled oil was augmented by earnings from the U.N. Oil-for-Food Program, which supervised the marketing of some 3.4 billion barrels of Iraqi crude between the start of the program and March 2003, when the United States and Britain invaded Iraq. The United Nations also ensured that the Iraqi share of oil-for-food income was spent only to meet humanitarian needs. The rest went for war reparations (25 percent after December 2000, 30 percent before), the cost of U.N.

weapons inspections (0.8 percent), and administrative and operational costs for the program (2.2 percent). Overproduction by OPEC members remains a problem during periods of ample crude supplies, but political turmoil and consequent supply disruptions in member countries, from Venezuela and Nigeria to Iraq and Indonesia , have masked the problem of excess capacity by creating or even merely threatening war-related shortages. Yet members able to do so are expanding production capacity, which will add to conflict over production ceilings and quota allocations as growing supplies from Iraq come to the market. Overall, OPEC's difficulties in managing and stabilizing the international oil market continue to be beyond member control. Following the collapse of the Soviet Union , the new Central Asian countries offered attractive terms to potential investors in oil and gas exploration and development. Now rising production from this region adds to pressures on the price structure. The need for capital investment is another axis of competition pitting OPEC against Central Asian and non-OPEC African producers, leading many OPEC members to reconsider their positions on nationalization. IOC operations are expanding in virtually every OPEC nation, while the occupation of Iraq could leave a privatized Iraqi oil industry as one of its legacies.

OPEC's gravest failure has been its concentration on oil market conditions rather than on the economy as such. Consequently, it has failed to develop strategies to prepare members for a post-oil world. As long as prices are low and supplies seem secure, oil will remain a competitive fuel in global markets and the deep restructuring necessary to wean member economies from their addiction to oil revenues can be avoided. Yet whether post-Saddam Iraq will be reintegrated into OPEC or not, relying on hydrocarbon revenues as the mainstay of their economies leaves members vulnerable not only to the day-to-day vagaries of the market but also to the impact of long-term structural change. The almost exclusive concentration of governments, press, and public on oil pricing actually prevents OPEC from devoting significant intellectual and financial resources to other aspects of industry development, including research on alternative sources of energy for export and domestic use. Kuwait's early research into solar power, for example, was quickly abandoned as its oil reserves expanded and reliance on oil revenues seemed less risky than devoting substantial resources to bringing a competing energy source to markets where it already had an advantage.

Yet with concerns about pollution and global climate change encouraging consumers to shift out of hydrocarbons, OPEC members' acute dependence on oil and gas revenues leaves their economic security as vulnerable to changes in market structure as they are to political conflict. see also as-is agreement; oil embargo (1973–1974); petroleum, oil, and natural gas. Bibliography Mikdashi, Zuhayr. The Community of Oil Exporting Countries: A Study in Government Cooperation. Ithaca, NY: Cornell University Press, 1972. Mitchell, John, et al. The New Economy of Oil: Impacts on Business, Geopolitics, and Society. London: Earthscan, 2001. Skeet, Ian. OPEC: Twenty-Five Years of Prices and Politics. Cambridge, U.K.: Cambridge University Press, 1989. Tétreault, Mary Ann. Revolution in the World Petroleum Market. Westport, CT: Quorum Books, 1985. Weisberg, Richard C. The Politics of Crude Oil Pricing in the Middle East, 1970–1975.

Berkeley: University of California, 1977. mary ann tÉtreault Pick a style below, and copy the text for your bibliography. MLA OPEC (Organization of Petroleum Exporting Countries) Encyclopedia of Espionage, Intelligence, and Security COPYRIGHT 2004 The Gale Group Inc. OPEC (Organization of Petroleum Exporting Countries) █ JOSEPH PATTERSON HYDER The Organization of Petroleum Exporting Countries (OPEC) is a coalition of eleven nations that controls over fifty percent of the world's oil and natural gas exports. OPEC members are Algeria , Indonesia , Iran , Iraq , Kuwait , Libya , Nigeria , Qatar, Saudi Arabia , United Arab Emirates , and Venezuela . OPEC strives to protect the economic interests of participating countries while maintaining a stable petroleum market by establishing production quotas for its member states. Large Western oil companies controlled and profited from oil production in the Middle East and Africa in the first half of the twentieth century. The oil companies angered the leaders of these oil-rich countries by retaining 65 percent of the profits. OPEC was established in 1960 in order for the oil producing countries to maintain a larger percentage of oil-derived profits.

Although OPEC represented its members in negotiations with the large oil companies, the organization exercised little control over the world oil market until 1973. With inflation spiraling around the world and with increasing oil demands in the United States and Europe , OPEC realized that the stage was set for a major power grab. Inflation led the Richard M. Nixon administration to place price controls on oil products in March 1973, resulting in increased demand. Faced with oil shortages because of increased demand, Nixon tapped U.S. oil reserves. By autumn 1973, the U.S. had nearly drained its reserves. The United States had become more dependent on oil imports than ever before. The Yom Kippur War began in October 1973, with the United States and Western Europe supporting Israel over Egyptian and Syrian forces. OPEC, comprised primarily of Middle Eastern countries sympathetic to Egypt and Syria , made a move to seize increased control of the world oil market. OPEC imposed an oil embargo against the United States and increased oil prices in Europe. The price of crude oil doubled in a matter of days, from three U.S. dollars per barrel to over five dollars per barrel.

In January 1974, prices reached 11.75 dollars per barrel. The oil embargo of 1973–1974 inconvenienced frustrated Americans, who had to modify their lifestyles to accommodate the steep increase in oil prices. The White House encouraged Americans to conserve energy by driving less, carpooling, and turning down thermostats. The Nixon administration responded by extending Daylight Savings Time in the United States, encouraging companies to trim work hours, and pushing Congress to approve construction of the Alaskan Pipeline. The energy crisis that resulted from the OPEC embargo fueled a worldwide recession. The Dow-Jones lost 45 percent over the next two years. Oil shortages led to long lines at gasoline pumps. When OPEC finally lifted the oil embargo against the U.S. in March 1974, it had established itself as one of the most powerful economic forces in the world. OPEC's strategy backfired, however, when public and political opinion in the United States and Europe was inflamed. The United States increased its oil production with the completion of the Alaskan Pipeline in 1977.

Large American and European oil companies also sought to regain some of their lost influence by increasing oil exploration in non-OPEC countries and offshore. As a result, much of the power that OPEC had wielded over world energy markets was eroding. For the first several years of the 2000s, OPEC sought a stable oil market by maintaining an average price of $22 to $28 per barrel of crude oil; exerting price controls had become more difficult and less profitable for members. An example of OPEC's increasing ineffectiveness occurred in 2001, when crude oil prices fell by one-third. During the same year, OPEC cut its oil production by over twenty percent. OPEC has experienced periods of waning effectiveness in the past, but these periods were usually the result of internal disagreements. OPEC's more recent problems stem from the rise of large, non-OPEC oil producing states, such as Russia , Norway , Mexico, Oman , and Angola . In order for OPEC to remain a viable power, it needs the cooperation of these states. Russia, Norway, and Mexico have tended to follow OPEC's lead, but continued support from these states is questionable.

Russia has already indicated that it will proceed independently for the fore-seeable future. Many OPEC members have expressed an unwillingness to limit their oil production and profits if non-OPEC countries continue pumping at full capacity and flooding the market with cheap oil. If OPEC cannot hold sway over these emerging oil-producing states, then the primary reason for the existence of OPEC may eventually be in question. █ FURTHER READING: Organization of Petroleum Exporting Countries The Columbia Encyclopedia, 6th ed. Copyright The Columbia University Press Organization of Petroleum Exporting Countries (OPEC), multinational organization (est. 1960, formally constituted 1961) that coordinates petroleum policies and economic aid among oil-producing nations. Its Board of Governors and board chairperson are elected by member nations; OPEC's headquarters are in Vienna, Austria. Members consist of Algeria, Angola, Ecuador (membership suspended 1992–2007), Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Indonesia was a member but suspended its membership in 2008.

Saudi Arabia has traditionally dominated the organization, owing to its enormous oil reserves; the organization's members produce about 40% of the world's crude oil. In 1973, as a result of the Arab oil embargo against Western nations who supported Israel during the Yom Kippur War (see Arab-Israeli Wars ), OPEC was able to raise oil prices tremendously; the price hike caused inflation in oil-importing nations. Increases ensued from 1975 to 1980. However, as importing countries pursued alternate energy resources, OPEC was forced to lower prices by 1982. Oil prices remained low through most of the 1980s and 90s, with only a temporary hike during the Persian Gulf crisis of 1990–91 (see Persian Gulf War ). With the cooperation of non-OPEC oil-exporting nations, OPEC was able to raise prices in 1999 by cutting production. As prices rose above $30 a barrel in early 2000, OPEC members agreed to increase production somewhat, cutting back production again a year later in an attempt to maintain prices.

A worldwide economic slowdown caused oil prices to fall to near $20 by late 2001, but cutbacks by OPEC and non-OPEC nations, an economic rebound (including very strong economic growth in China), and the U.S. invasion and occupation of Iraq subsequently caused benchmark prices to rise and stay above $40 in mid-2004. Efforts by OPEC to control prices, however, have generally been less influential than market forces, which in 2008 drove the price of oil to nearly $150 in midyear and down to below $40 the year's end. Cite this article Gale Encyclopedia of U.S. Economic History COPYRIGHT 2000 The Gale Group Inc. OPEC OIL EMBARGO On October 17, 1973, Arab oil producers declared an embargo that drastically limited the shipment of oil to the United States . These producers, members of a cartel known as the Organization of Petroleum Exporting Countries (OPEC), enforced the embargo in response to the Yom Kippur War between Egypt and Israel. In a gesture of support for Egypt OPEC curtailed oil exportation to countries that supported the Israelis.

The cartel later extended the embargo to other countries and oil prices soared worldwide. Accustomed to the influx of ample, inexpensive petroleum from OPEC member countries such as Saudi Arabia , Iraq , Iran , and Kuwait , many nations remained at the mercy of these producers of the valuable natural resource. In the United States the embargo brought on a crisis of unequaled proportions. Daily shipments of oil from the Middle East dropped from 1.2 million barrels to a scant 19,000 barrels. Motor vehicle owners faced long lines at the service stations, and were forced to pay dearly for gasoline when they finally took their turn at the pump. Between May 1973 and June 1974 the average price of gasoline increased by 43 percent. Perhaps the most dangerous effect of the embargo however was the fear and panic it aroused. U.S. citizens were suddenly faced with the shortage of a resource indispensable to every industrialized nation. The shortage was mainly a matter of perception, since OPEC simply withheld oil and had not run out of it. In fact at the time the United States imported only about a third of the oil it used, relying on domestic production for the majority of its supply.

But the embargo proved that every drop counted and that a powerful cartel could bring the world to its knees. Daily hardships such as rising oil prices and rates of inflation made the perceived scarcity of the resource seem very real. Indeed the United States was consuming resources faster and more voraciously than most other countries. Although it represented only six percent of the world's population in 1973, the United States regularly consumed 33 percent of the world's energy supply. Station wagons and other gas-guzzlers were enjoying their heyday. A positive effect of the embargo was that it prompted conservation efforts throughout the country. President Jimmy Carter (1977–1981) declared a national speed limit of 55 miles per hour in order to cut back on gasoline consumption (meanwhile, the number of traffic-related deaths dropped considerably during that period). Between September 1973 and February 1974 the average daily use of petroleum dropped by more than six percent. The U.S. government adopted an energy conservation policy that remained in effect until President Ronald Reagan's (1981–1989) administration discarded it two decades later.

The embargo served as a reminder that the world's oil supply was finite and encouraged consumers to use it responsibly, at least for the time being. OPEC exercised an enormous amount of power during the embargo, which lasted well into 1974. But eventually the crisis hurt the cartel as much as the countries outside of it. The skyrocketing prices and the perceived shortage led to a drop in the overall demand for oil. Countries looked to alternative energy sources such as natural gas, nuclear energy, and coal. Oilproducing countries outside of the Middle East stepped up their pace of production and relied more heavily on their domestic supply. Unfortunately many of the positive effects of the 1973 crisis, the attempts at energy conservation and the move toward relying more heavily on domestic resources, did not last long enough after the embargo was lifted. Conservation efforts dropped off as memories of long waits at the gas station and inflated prices faded. A new breed of larger, less gas-efficient cars took to the roads in the 1990s when sport-utility vehicles and small trucks gained popularity. In the 20 years following the crisis U.S. dependence on imported oil increased rather than decreased, reaching the 50 percent mark in 1993.

In 1998 on the twenty-fifth anniversary of the embargo many analysts pointed to such statistics as indications that a crisis like that of 1973 could happen again. They claimed that the low, stable price of oil was misleading people in the United States into believing that the world's supply of the natural resource was unlimited. Meanwhile the nation continues to consume energy at an extraordinary rate. Whether or not it will take another economic crisis to change such ingrained behavior remains to be seen. Topic overview OPEC exercised an enormous amount of power during the embargo, which lasted well into 1974. But eventually the crisis hurt the cartel as much as the countries outside of it. The skyrocketing prices and the perceived shortage led to a drop in the overall demand for oil. Countries looked to alternative energy sources such as natural gas, nuclear energy, and coal. See also: Embargo, Petroleum Industry FURTHER READING Bode, Denise. "Twenty Years After OPEC Oil Embargo, United States at More Risk Than Ever." The Oil Daily, October 18, 1993. Chalabi, Fadhil J.

"OPEC: An Obituary." Foreign Policy, Winter 1997–1998. Crow, Patrick. "Remembering the 1973 Oil Embargo." The Oil and Gas Journal, October 18, 1993. "The Energy Embargo of 1973," [cited May 25, 1999] available from the World Wide Web @ Feldman, David Lewis. "Revisiting the Energy Crisis: How Far Have We Come." Environment, May 1995. Foner, Eric, and John A. Garraty, eds. The Reader's Companion to American History. Boston: Houghton Mifflin Co., 1991. Cite this article OPEC watching Iran, Russia, unlikely to cut output in June | Reuters Tue Mar 1, 2016 | 11:53 AM EST OPEC watching Iran, Russia, unlikely to cut output in June The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015.

Reuters/Heinz-Peter Bader By Rania El Gamal and Dmitry Zhdannikov | DUBAI/LONDON DUBAI/LONDON OPEC is very unlikely to cut output at its next meeting in June, even if prices remain extremely low, according to OPEC sources and delegates, as it will be too early to say how fast Iranian output is rising. The sources, which include officials from the Middle East, say OPEC countries such as Saudi Arabia also want to test Russia's commitment to freezing output before taking any further steps to stablize prices. More than 18 months after oil prices began a steep slide due to excess supply, Saudi Arabia, Qatar, Venezuela and non-OPEC Russia agreed last month to freeze output at January levels in the first global oil pact in 15 years. Saudi Arabian Oil Minister Ali al-Naimi said last week a supply cut was not on the cards although adding that the production freeze was only the first step to balance the market after prices fell to their lowest since 2003. "Maybe by the end of the year (a cut could be possible) when it is really clear that Iran is actually producing the volumes they are talking about.

But not in June," a source from one of OPEC's Middle Eastern producers said. January was peak or near-peak production for Russia and Saudi Arabia, the world's two top oil exporters, but Iran - OPEC's No.3 producer - is the key supply uncertainty for 2016 as it is raising output after the lifting of Western sanctions in January, adding barrels to the already saturated market. Over the past month, Iran has issued conflicting statements saying it could add up to 1.5 million barrels per day over the next year which would confound market skepticism that its fields were damaged by years of sanctions. Meanwhile, its February exports have disappointed as European buyers were cautious to immediately boost trade amid remaining dollar clearance and ship insurance problems. "No-one at OPEC knows what's going on with Iranian fields. So the Saudis want to see what happens in reality," a source in one of the OPEC delegations who is familiar with production freeze negotiations, said. NO SPECIAL TERMS Non-OPEC Oman and some OPEC sources have floated an idea of Iran being exempt from output freezes - as was Iraq in the past when the country was subject of international sanctions - but so far Tehran has not been offered any special terms, according to OPEC sources.

Iranian Oil Minister Bijan Zanganeh said last week the production freeze was "laughable" while Iranian sources say the country would be prepared to discuss a production pact once its output reached the pre-sanctions level. Analysts believe output and exports could rise by a maximum of 0.7 million bpd to around 3.5 million bpd in the next months but it will take time to understand where real figures stand. Iran, for instance, has already told OPEC it was pumping as much as 3.4 million bpd in January - a much higher number than estimated by OPEC watchers. By June, when OPEC holds it next meeting, the picture of Iranian exports will still not be clear, several OPEC sources said, adding that they might only have reliable numbers for April. The sources also said it will be too early to say in June if the world's record oil stocks have finally become to shrink. Saudi Arabia and Russia have not said the output freeze would be void if Iran refuses to join in, leaving room for a potential compromise.

Russia's Energy Minister Alexander Novak plans to travel to Iran, Moscow's close ally, in March for more talks on the production freeze, which he said could last for as long as a year. RUSSIAN COMPLIANCE If Russia respects the output freeze, it would be a major departure from its former policies. The only time Russia agreed to cooperate with OPEC was in 2001 but it never delivered on its pledge and raised exports instead. That was a big disappointment for Naimi, who orchestrated the 2001 deal, and is still wary of agreeing anything at risk of being cheated by Russia or fellow OPEC members. "Even if they say that they will cut production they will not do it. There is no sense in wasting our time seeking production cuts," he said last week. But in the opinion of OPEC watchers the output freeze deal signals a change of tone for Saudi Arabia, from a view that the market would rebalance itself to one where it might need a push. "Eventually, we will have a cut in production," one OPEC delegate said, declining to be identified. Others are urging swifter action.

Qatar's former energy minister Abdullah al-Attiyah, who is still talking to producers inside and outside OPEC, said a cut was needed before the glut became unmanageable. (Additional reporting by Alex Lawler; Writing by Alex Lawler and Dmitry Zhdannikov; Editing by Anna Willard) ADVERTISEMENT Qatar's OPEC MAX meeting and the oil price rout that wasn't - The Barrel Blog The Barrel Blog > Qatar’s OPEC MAX meeting and the oil price rout that wasn’t Share (0) Qatar’s OPEC MAX meeting and the oil price rout that wasn’t There was much gnashing of teeth as Qatar’s grand meeting of oil producers failed to reach agreement April 17 to freeze production at January levels. Commentators predicted a collapse in oil prices and some discerned the demise of OPEC itself. But since then the expected rout in prices has yet to materialize, stock markets have been unfazed, and the outcome from the point of view of OPEC’s dominant Arab Gulf members may not be unsatisfactory.

No doubt some delegates found it annoying to needlessly spend 12 hours cooped up in a five-star hotel in Doha, albeit with a visit to pay their respects to the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. The failure of the talks was an embarrassment and will be felt by OPEC’s weakest nations, particularly Venezuela, which is in a state of crisis and badly needs oil prices to rise. That prices did not immediately fall more than a couple of dollars owed something to a strike by oil workers in Kuwait, which caused the country’s production to fall initially to just 1.1 million barrels per day, barely a third of normal levels. In the aftermath of the talks, Russia, which had invested much effort trying to broker a deal, indicated it would continue pumping at record levels, above 10.8 million b/d, helping to cap prices. Amidst the failure to agree a freeze and Russia’s determination to boost output, there were reasons for markets not to panic, at least for the time being. Markets had after all not given much credibility to the proposed production freeze. And production prospects are now depressed not only for Venezuela, but a number of countries worldwide.

Some observers are starting to doubt Iran has much more to offer the market for the time being than the increase it has managed since sanctions against it were lifted in January – generally estimated at 300,000-350,000 b/d. Investment bank Tudor Pickering Holt said April 18 that further significant increases from Iran would require more capital expenditure, which was “not likely in the current environment.” More fundamentally, the economic impetus for a production freeze has somewhat waned since the idea was first proposed in February. Back then, prices were around $10/b lower than when the April 17 meeting came round, and had recently hit $27/b, amid generalized worries about the global economy and China in particular. Since then, the outlook for the world economy can’t be said to have transformed. But in terms of oil demand, some of those jitters have eased, as documented by successive monthly reports from the International Energy Agency.

In February the agency was talking of a “false dawn” for oil prices, in March this had changed to “light at the end of the tunnel.” By this month it was predicting oil markets would come “close to balance” in the second half of this year, with supply exceeding demand by just 200,000 b/d in the third and fourth quarters. Oil demand in China, India and Russia has been robust, the IEA added. Why then sweat to get a deal in Doha? The question was pertinent for OPEC’s core Arab state members and above all Saudi Arabia, which had given mixed signals about the proposed freeze. Saudi Arabia has cast doubt on the desirability of oil prices rising much further, sometimes framing the issue in terms of diversifying its economy. In terms of oil markets, one question is how far prices can rise without causing a rebound in US shale oil production. The answer, with hundreds of US shale wells drilled but sitting idle – uncompleted and waiting for prices to rise – may be not much.

“As things get back into the $40-45 range then we would start completing the drilled but uncompleted wells,” James Volker, chief executive of Whiting Petroleum, which has around 150 such wells in the Bakken and Niobrara shale, said in February. But the April 17 meeting in Qatar was about more than prices. For some participants the idea of sealing a major pact on supply management outside of normal OPEC boundaries – brokered by Russia, with help from rising regional power Qatar – may not have been attractive. Granted, the collapse of talks was a blow to participants’ prestige, but what might have been worse for some would have been a deal that effectively replaced OPEC and its six-monthly meetings in Vienna, and put Russia in the driving seat of a larger, more nebulous group, with the Gulf Arab states’ control diluted. Qatar’s rise as a diplomatic force, financed by the latest big thing in energy markets, liquefied natural gas (LNG), has raised hackles among some Gulf states. Probably more significantly, Russia’s flexing of its muscles in the Middle East has not made for comfortable viewing for a Saudi regime that has made clear where its international focus lies.

That is not Russia. Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman made this evident in an interview with Bloomberg ahead of the April 17 talks, saying: “America is the policeman of the world, not just the Middle East. It is the number one country in the world and we consider ourselves to be the main ally for the US in the Middle East.” Tellingly for those heading to Qatar, he added: “I don’t believe that the decline in oil prices poses a threat to us.” Share Like the article Sun sets on Opec dominance in new era of lower oil prices - Telegraph Energy Sun sets on Opec dominance in new era of lower oil prices Flood of new oil supply coming onstream from outside Opec and weakening demand makes the group's role in energy markets less relevant, writes Andrew Critchlow By Andrew Critchlow , Commodities editor 1:00PM GMT 22 Nov 2014 Follow It wouldn’t be the first time that a meeting of the Organisation of Petroleum Exporting Countries (Opec) has taken place in an atmosphere of deep division, bordering on outright hatred.

In 1976, Saudi Arabia’s former oil minister Ahmed Zaki Yamani stormed out of the Opec gathering early when other members of the cartel wouldn’t agree to the wishes of his new master, King Khaled. The 166th meeting of the group in Vienna next week is looking like it could end in a similarly acrimonious fashion with Saudi Arabia and several other members at loggerheads over what to do about falling oil prices. Whatever action Opec agrees to take next week to halt the sharp decline in the value of crude, experts agree that one thing is clear: the world is entering into an era of lower oil prices that the group is almost powerless to change. This new energy paradigm may result in oil trading at much lower levels than the $100 (£64) per barrel that consumers have grown used to paying over the last decade and reshape the entire global economy. It could also trigger the eventual break-up of Opec, the group of mainly Middle East producers, which due to its control of 60pc of the world’s petroleum reserves has often been accused of acting like a cartel.

Related Articles Iraq and Iran plot oil revolution 28 Jan 2014 Even worse, some experts warn that a prolonged period of lower oil prices could reshape the entire political map of the Middle East, triggering a new wave of political uprisings in petrodollar sheikhdoms in the Persian Gulf, which depend on the income from crude to underwrite their high levels of public spending and support less wealthy client states in the Arab world. “We are now entering a new era in world oil and we will have lower prices for some time to come,” says Daniel Yergin, the Pulitzer prize-winning author of The Quest: Energy Security and the Remaking of the Modern World. “Oil was really the last commodity in the super-cycle to remain standing.” Mr Yergin spoke exclusively to The Sunday Telegraph ahead of what is being called the most important gathering of Opec in more than 20 years. As oil ministers from its 12 member states prepare to fly into Vienna this week they face their biggest challenge since the depths of the financial crisis at the beginning of 2009, as bearish sentiment and oversupply grips the market.

Brent crude prices have fallen by almost 30pc since reaching their high point for the year of $115 per barrel in June. “The oil market is being redefined by two factors. Firstly, the astonishing growth in US oil production, which is real and dynamic. Secondly, the realisation that the world economy is much weaker that was previously expected so demand is being squeezed,” says Mr Yergin, who also sits on the US Secretary of Energy Advisory Board. The fall in prices comes at a time when Opec’s domination of the world oil market is being challenged seriously for the first time in more than 30 years by the unexpected and sudden resurgence of the US as a major producer. By 2020, Citigroup estimates that America will be pumping more than 14m barrels per day (bpd) of oil and petroleum liquids, giving it the capacity to export almost 5m bpd, which will transform the energy markets. Lifting the ban on US crude oil exports, which first came into force in the 1970s to ensure energy security, is becoming an evermore likely move by Washington as it seeks to apply pressure on Russia’s President Vladimir Putin to back down over Ukraine.

According to the energy advisers IHS, such a move would further stimulate growth in domestic production and cut America’s existing import bill by $67bn, a figure not far from Britain’s total expenditure on defence. “They recognise that the threat from North American supply is a challenge to Opec today just like the North Sea was in the 1980s,” said Mr Yergin. “Opec is going to have a very hard time adjusting to this because there isn’t agreement within the group on what to do. Everyone is happy for Saudi Arabia to cut production but the Saudis don’t want to cut and lose more market share, especially to Iran and Iraq.” Opec nations are producing about 200,000 bpd more than their agreed quota of 30m bpd, while demand for the group’s oil is expected to fall as low as 29.2m bpd next year, as more North American supply becomes available. To balance supply with demand would suggest that Opec will have to agree on cutting up to 1m bpd from its members’ production and the responsibility for delivering this will fall mainly to Saudi Arabia.

The kingdom is the world’s biggest and cheapest exporter and because of its ability to immediately pump up to 12.5m bpd is viewed as the “swing” producer within Opec and the world. If the group is to agree cuts, that will mean Riyadh will have to make the biggest contribution to the overall reductions and surrender more market share to its rivals within the group such as Iran and Iraq. Opec owes its existence to a period of great economic and political upheaval in the 1960s, when demand for crude oil began to surge from rapidly growing industrialised economies and producing countries in the Middle East started to emerge as newly independent states. Created in Baghdad by five original members including Saudi, Iraq and Venezuela, the organisation offered the first real counterbalance to the so-called “seven sisters” of international oil companies such as Shell and BP, which had dominated global supply up to that time. The group normally meets a few times every year at its headquarters in Vienna unless an “extraordinary” meeting is called for in response to events such as the Arab Spring in 2010, or the financial crisis.

Some members urged such an emergency gathering in response to the current sharp drop in prices but appeals for deep cuts to production have so far been resisted by Saudi Arabia’s oil minister, Ali al-Naimi. Saudi Arabia is the undisputed dominant force within the group, but its power is increasingly being challenged by an axis of Iran and Iraq. Since the downfall of Saddam Hussein and the exit of a major US military presence in the country, Baghdad has moved closer politically to its Shiite Muslim neighbour Iran. The country holds vast oil reserves and has plans to produce up to 9m bpd by the end of the decade, despite the threat posed by Islamic State militants in its northern provinces. Iran, Saudi Arabia’s natural enemy in the Gulf, even before the downfall of the Shah in 1979, could also be in a position to boost its capacity significantly, if the West lifts nuclear sanctions restricting international investment in its energy sector. Both countries need prices to remain high given the weakness of their wider economies and lack of foreign currency reserves, making it likely that they will push for a big cut in Opec production next week.

Iran’s influential oil minister Bijan Zanganeh has already called for emergency bilateral talks with Saudi Arabia in Vienna to discuss the thorny issue of how to accommodate an expected increase in production from the Islamic state. Last week Mr Zanganeh said: “The countries in the south of the Persian Gulf are interested in keeping their market share and a decrease in market share will be difficult.” Then there are the non-aligned countries, including Venezuela, Nigeria and Angola. These states account for a combined 6.6m bpd of Opec supply and all hold ambitious plans to boost production. Like Iran and Iraq, they are thought collectively to be pushing for deep cuts to Opec’s quota to restore oil prices back to $100 per barrel, a level required to maintain their economies. However, Saudi Arabia and its Arab allies in the Persian Gulf appear reluctant to acquiesce to these demands. With relatively small populations and vast oil reserves these producers, which form the core of the Gulf Co-operation Council (GCC), are largely dependent on Western support for their security in an inherently unstable region.

This dependency has recently been demonstrated by the need to rely on the US and the UK to launch air strikes against the Islamic State in Iraq, amid fears that the terrorist group could also destabilise these oil-rich Gulf monarchies if allowed to spread its jihad throughout the wider Middle East. In this context, Saudi and its allies may be more willing to allow oil prices to fall to levels around $70 per barrel to help appease the US by applying economic pressure on Russia, which also depends on crude sales for much of its foreign currency revenue. However, these states – which account for about a fifth of the world’s oil supply combined – are also in danger of losing a greater share of the market to US shale production. That threat could be partly nullified by lower prices, which according to Deutsche Bank research would see almost 40pc of US shale oil wells become unprofitable if Brent continued to trade at its currently depressed levels for a prolonged period of time. However, with break-even prices estimated in the range upwards of $80 per barrel in order to finance their economies these Gulf states, which include the United Arab Emirates (UAE), Qatar and Kuwait, may be reluctant to see prices remain below $100 per barrel for too long.

The problem for policymakers in these countries is that Opec’s ability to influence prices has been fundamentally weakened by the rapid growth of supply outside the Middle East. Opec has seen its share of the market fall from around half 20 years ago to just under a third today, with production from outside the group expected to exceed 63m bpd next year. The need to redress this decline makes the necessity for Opec’s biggest producers such as Saudi Arabia to cut production even more unpalatable and could signal the beginning of the end of the cartel’s global influence. “The only thing that really unites Opec members now is that they all produce oil but if the price keeps going down then the pressure will build for some kind of action,” said Mr Yergin. Lower oil prices will also pull at the political fabric holding together many of Opec’s members, especially in the war-torn Middle East. Persian Gulf sheikhdoms have pumped billions of pounds into supporting neighbouring Arab states whose old regimes were torn apart by the popular uprisings, which started as bread riots in Tunisia in 2010.

Saudi Arabia and the UAE have agreed to pump an additional $20bn into supporting the government of ex-Field Marshal Abdulfattah el-Sisi in Cairo, while continuing to support factions in the campaign to oust the regime of Bashar al-Assad in Syria. Falling oil prices will seriously challenge their ability to co-opt neighbouring states and undermine their own domestic economic models, which are dependent on revenue from petroleum exports. “Riyadh has miscalculated,” says Christopher Davidson, a reader in Middle East politics at Durham University and author of After the Sheikhs: The Coming Collapse of the Gulf Monarchies. “The Arab Spring never really ended, it was just put off. Certain regimes have been trying to keep those political forces at bay with oil so the current fall in the price will weaken the power of these governments substantially.” Whatever action Opec takes on November 27, it is clear that its once staggering power over the global economy has been considerably weakened as a new era of lower oil prices beckons.

Question: Which country was the only original member of OPEC outside of the Middle East?
Answer: Venezuela